Milli Vanilli Lawsuits Denied : Pop music: A Philadelphia federal judge refuses to certify two class-action suits that seek to make the record company accountable for pop duo's lip-synced album.

Two multimillion-dollar class-action lawsuits filed against Milli Vanilli's record company have been denied certification by a federal judge in Philadelphia.

The lawsuits--which charged Arista Records, the Bertelsmann Music Group (BMG), producer Frank Farian and front men Robert Pilatus and Fabrice Morvan with "common law fraud, negligent misrepresentation and violation of state consumer protection statutes and civil RICO codes"--are believed to be the first ever filed by a pop group's fans seeking to hold a record company accountable for the practice of lip-syncing.

While the ruling Friday by Third Circuit District Court Judge James T. Giles puts a stop to the Pennsylvania class-action proceedings, it does not prevent Milli Vanilli fans from filing individual suits against the record company. Nor does the decision have any direct legal bearing on 20 similar Milli Vanilli class-action claims pending in other federal, state and local courts across the country--including two in Los Angeles.

Still, Joel Schoenfeld, general counsel for BMG (Arista's parent company), said that he was encouraged by the decision.

"BMG has never believed that this was an appropriate matter for a class-action lawsuit," Schoenfeld said in a phone interview from New York. "And while this federal ruling does not put an end to other pending cases, it supports our view that eventually these lawsuits will be resolved in the way we hope."

Class action is a legal procedure that allows any individual to sue on behalf of a large number of people who share a common interest. By presenting the case as a single suit, plaintiffs who cannot afford to sue individually save time and money, legal experts say.

The Milli Vanilli class-action claims were initiated by consumers last November after Pilatus and Morvan disclosed that they never sang a note on their smash album "Girl You Know It's True" nor at any of their live performances.

At the time, the pop duo alleged that Arista Records president Clive Davis knew they did not sing on the album at least six months before they were awarded a 1989 Grammy for best new artist, but purposely misrepresented the pop act to the public. Arista and BMG denied the allegations.

Although BMG sold about 10 million copies of Milli Vanilli's "Girl You Know It's True" album worldwide, the company said that it received only 49 complaints from angry consumers, seven of which were for defective product. Likewise, the nation's 17,000 major retail outlets report receiving only 100 requests for refunds from miffed Milli fans.

Even if consumers did win a class-action claim, individual fans could not expect to be awarded any more than three times the cost of the Milli Vanilli product they purchased, legal experts said. Their attorneys, on the other hand, stand to recover substantial legal fees.

"I believe that BMG is being victimized by plaintiff's attorneys for their own ends, not for the benefit of their clients," Schoenfeld said. "The entertainment business is being targeted by lawyers who think they can make a financial killing for themselves."

Judah I. Labovitz, attorney for the Philadelphia plaintiffs, declined to comment on whether his clients would appeal the decision, but defended the suit as a consumer action claim.

"People are entitled to get what they pay for," Labovitz said in a phone interview from Philadelphia. "It's not right for a group or a company to tell the fans who buy their products that two people are singing on the recording when in fact they are not."

Music industry sources close to the case speculate that BMG may use the ruling to negotiate a settlement in the 20 cases still pending in court.

The company is reportedly prepared to grant unhappy Milli Vanilli fans an unprecedented rebate offer that would guarantee a partial refund to consumers who could prove they purchased Milli Vanilli albums, cassettes and tapes, insiders said.

BMG officials could not be reached for comment, but Schoenfeld did not rule out the possibility of a settlement.

"We have to decide from a business standpoint if the cost, time and resources it takes to win these cases is justifiable or whether there might be another appropriate way to resolve these disputes," Schoenfeld said. "In any kind of major complex litigation, a settlement is always an option and we would not discard that option."

According to insiders, BMG would agree to pay about $2 to every Milli Vanilli fan who submitted a bar code identification tag clipped from the duo's 1988 smash debut "Girl, You Know It's True." The settlement, sources say, could also provide consumers with the option of contributing their rebate money to a plaintiff-approved charity to which BMG would pledge a substantial donation.

Marketing analysts estimate that the rebate offer would spur reimbursement requests from about 5% to 25% of the 10 million Milli Vanilli fans who purchased the recording.